Budget Survival Strategies

With higher ed budgets putting IT organizations under strain, 3 IT leaders explain their strategies for handling the heavy lifting demanded of them.

• By Andrew Barbour
• 03/07/13

Illustration by Jon Reinfurt

With the US economy continuing its weak recovery, it's tempting to think that IT budgets in higher education might begin to rebound, especially in light of the increased focus on online learning. Nice thought, but no. Education costs are rising even faster than those for healthcare, and the public outcry over the cost of higher education is--deservedly--growing louder.

Efficiency remains the name of the game, and IT is being tasked with finding many of those efficiencies--on top of its usual role. Unfortunately, IT's elevation to efficiency expert has not been accompanied, in most cases, by a fatter budget. To find out how schools are coping with more responsibility amid anemic budgets, CT talked with three IT leaders from a range of higher ed organizations.

What is the biggest budget challenge facing your IT group? Why?

Joy Hatch: The biggest budget challenges are related to personnel. In the last few years, enrollment at community colleges has risen significantly as people look for a way to gain new skills or to save money and still attend college. In Virginia, this equated to an increase of 50,000 students during the height of the recession. At the same time, IT has been rolling out major enterprise systems, including a financial system, human resource management system, decision support, and--waiting in the wings--a workforce enterprise system. This work comes on top of increased computer lab and support needs on the individual campuses.

The growth in student enrollment signified a need for more faculty and more student services, but there have been no increases in staffing for IT. Maintenance of the new systems has been absorbed by existing staff, even as everyone is assigned new projects. A recent conversation with a few of the college presidents demonstrated that they recognize the need for IT staffing, but fiscal realities and a focus on students make it almost impossible to resolve today.

The budget in the System Office has also decreased, yet we continue to deploy new enterprise systems. Recent studies within IT show that 85 to 90 percent of staff time is spent in operational support, with the rest on new endeavors. Ironically, the new projects make up the majority of the budget.

Kamran Khan: The biggest budgeting challenges lie in IT's ability to react to and accommodate the following:

• Users now have many technology choices.
• We need to keep pace with the rapid change in technology.
• IT has become a pervasive presence in all facets of the university's core mission.
• We need to replace or refresh aging components of our IT infrastructure that provide core services.
• IT must be able to illustrate the return on investment for capital and infrastructure projects.
• Retaining and recruiting IT staff in a competitive business landscape are a challenge.

What changes have you made to your IT group and how it operates in response to increased budget pressures?

Thomas Hoover: One of the biggest changes involves how we handle the departure of an employee. We look at the vacant position in depth and analyze how it can best be used. The first question is whether the position needs to be refilled or whether it can be repurposed to fulfill a larger strategic need in the IT department. We also try to refill positions at a slower pace than usual in order to recoup some salary savings and to make sure we hire the right person. Every little bit helps.

To do a better job of retaining our employees, we have moved some of our operating funds to the salary part of the budget. More and more, we find that we need to increase compensation because of rising IT salaries in the corporate and private sectors. As a result, due to the lack of yearly budgetary increases and the fact that we are redirecting operational funds to retain staff, we find ourselves more reliant on one-time funding for projects.

We also try to think outside the box in some of our purchasing. We recently acquired 11 high-definition videoconferencing units, for example. By purchasing refurbished equipment, we saved 76 percent of the cost of buying new equipment. The equipment comes with a one-year warranty and looks brand new. We have also tried to be thoughtful about how best to use one-time funds by focusing on more strategic and long-term purchases.

Hatch: Our biggest problem is not having the personnel to adequately staff new projects while continuing to keep everything running. To address this, we have attempted to manage the project-induction process better, with the goal of reducing the workload on already-overburdened staff. One key change was the creation of a Project Board to manage the process. Membership on the Project Board includes cabinet members, along with the directors of procurement, budget, and grants. The Project Board approves new projects, prioritizes approved projects, and provides high-level oversight for the baseline goals of each project.

The Project Board gives IT the opportunity to explain to our counterparts the potential risks and issues for each project, and also to determine the availability of technology personnel. Finally, it provides the perfect forum for cabinet members to understand the full portfolio of work in progress for IT.

Khan: To improve efficiency and reduce costs, we have done the following:

• The budget-allocation and decision-making processes for annual IT infrastructure purchases have been centralized.
• We reduced spending in some areas of IT such as subscriptions, travel, and subsidies.
• Each open position is now subject to review per IT- and campus-support needs. Positions are reorganized and customized as support and service requirements change.
• We are putting increased emphasis on three-, five-, and seven-year plans for major infrastructure, where applicable.
• Expenses are reviewed based on needs and justifications rather than "wants" or "nice to have."
• We use data, when available, to analyze spending requests.
• Spending patterns from prior calendar and fiscal years are analyzed to help determine the allocation of funds.
• IT is educating the campus community about choices and trade-offs related to technology implementation (e.g., availability of services, in-house vs. build vs. cloud). In some cases, we have partnered with departments and institutes with much success.

In what areas of IT have you been able to generate the most savings? How?

Khan: We have realized cost savings in a number of ways:

• Purchases (hardware, software, training, etc.) are now typically handled through a central IT procurement process, whereas before individuals purchased most items on an ad hoc basis.
• Where possible, we have standardized on some university vendors to get campus discount pricing. Emergency break/fix purchases happen, but the number of these purchases has been reduced due to a spares pool and accurate projections.
• Requests to replace classroom and lab workstations are analyzed to ensure that the old computers meet replacement criteria.
• We monitor the use of computer labs and, where applicable, work with faculty and students to reallocate resources for effective use.
• The school is enforcing department standards and university policies covering the use of preferred vendors and earning tax exemptions.
• Implementation of hardware standards; virtualization; high-availability central management of services; and centralization of server assets in campus data centers.
• By monitoring data center performance better, we are saving energy and creating a greener footprint.
• We are partnering with vendors to dispose of IT assets in a secure and environmentally friendly way with minimal cost to the campus.
• We have established collaborative relationships with companies to test and implement technology that furthers the mission of the university.

Hoover: The first area that comes to mind is server virtualization. We have virtualized 70 percent of the servers in our data center, which has helped in several ways. With fewer servers, we don't need as much air-conditioning to keep them cool, and virtual servers are much less expensive than physical servers. As an added bonus, new virtual servers can handle higher temperatures, so we have raised the temperature in the data center a few degrees. By using blade chassis servers to run the virtual server stack, we also reduce cooling and power costs, while easing many maintenance challenges.

We have also been able to generate savings by consolidating hardware and software purchasing. Our IT office has started to order PC computers quarterly as opposed to piecemeal orders of one or two at a time. We send out a notification campuswide that we will be doing a consolidated hardware purchase, and all departments are given a date by which they need to have their list of hardware submitted and approved through SharePoint.

In addition, all of the University of Tennessee campuses have the opportunity to combine their purchases with ours. We then work with our vendors to secure the best prices based on volume. We even have the PC vendor pre-image the machines at the factory, since they can do it for less than our internal staff can. Plus, it allows staff to stay focused on more strategic projects.

We also compiled a list of software that was previously purchased only at the department level and sought to purchase campuswide licenses instead. We ended up working with other University of Tennessee campuses to get better pricing, based on the increased number of licenses we were purchasing. We have experienced significant savings through these software consolidations.

Another way to generate huge savings is through data center consolidation. Because of the way that IT evolved at UTC, servers were located in multiple locations on campus, and silo purchasing of server and storage-area network hardware was a common occurrence, sometimes even for the same computer room. We reached out to the different departments to explain why it makes sense to have all servers in one location and to plan coordinated purchasing across silos. We stressed the importance of having all servers in a central data center. The benefits include reducing duplication of air-conditioning units, and power backup provides for a more secure location. We not only saved money but increased performance.

Hatch: For Virginia's Community Colleges, our biggest savings come from the centralized infrastructure and implementation of our enterprise systems, such as the student and finance systems, the decision-support system, and the new workforce enterprise system. For example, VCCS has one of the largest PeopleSoft Campus Solutions and Blackboard Learn implementations; by using a centralized approach, we are able to provide more services for the 23 colleges and there are significant savings.

In addition, the statewide Multiprotocol Label Switching (MPLS) network allows us to create a private cloud, and serves as a launching pad for other services such as an enterprise authentication as well as opportunities for shared services including VoIP, security scanning, and e-mail. Without these centralized services, our smaller colleges would be unable to provide the services they do...or at least not at the same level. The cost of running the systemwide data center and our enterprise apps is less than 1 percent of the VCCS budget, with savings of at least $20 million per year.

Other savings are also generated from joint procurement opportunities on a variety of items ranging from computers to software licensing. We are in the process of expanding what has worked so well for IT into other areas of our operations.

Looking ahead, what emerging IT trends are likely to consume a significant amount of your budget, and why?

Hoover: What we see is probably similar to what other institutions across the country are experiencing. We will be spending a lot of money and resources on maintaining and expanding our core network infrastructure and on wireless. This includes increasing bandwidth and the hardware to allow for expansion. With the number of network devices exponentially increasing each year--as well as heightened expectations from students, staff, and faculty--we will need to continue to make strategic investments to handle this. Last August, we upgraded our university bandwidth to 2.2 GB and will probably need to upgrade that to at least 3 GB within the next year. In the past year, the number of devices on our network increased 32 percent.

Along those same lines, we need to continue to invest and improve our classroom technology. There is now an expectation--rightfully so given how technology can enhance the teaching and learning experience--of having technology installed in every classroom. Some of the technologies that we are piloting for classroom use include lecture capture as well as videoconferencing technologies.

We will also be making significant investments in online and distance-learning technologies. These technologies include web and audio conferencing, more online collaboration tools, and a digital repository.

Hatch: Running a data center to support the size of our current enterprise systems takes a lot of financial and human resources--and will probably continue to do so even as we begin to explore cloud options, starting with some of our smaller systems. In addition, we are preparing to launch an enterprise mobile application that will allow us to take advantage of our enterprise resource planning system--and the programming skills of the colleges--to ensure that we meet our students' needs. VCCS is also pursuing innovations, and ways to be more flexible in pursuit of innovation. If we are flexible, we will be able to quickly identify new opportunities and options, thus saving resources in the process.

Khan: Despite the fact that the majority of the IT budget is dedicated to salaries, fielding a competitive IT workforce is a major challenge in a highly demanding and rewarding marketplace.